WASHINGTON-Credit unions continue to sell increasing portions of their home loans as interest rates fall to decade-lows.
A new report by NAFCU shows through the first half of 2009 CUs sold 49.1% of their mortgages, compared to just 32.3% in 2008, when mortgage rates were as much as 100 basis points, or 1% higher. "Despite the fact that a vast majority of the responding credit unions currently consider interest rate risk as a bigger problem when compared to liquidity risk (92.7%), they hold a smaller average percentage of their loans granted this year in portfolio (50.9%) than they did in 2008 (67.7%)," the report said.
The increase came after the federal government took over Fannie Mae and Freddie Mac, and as the average rate for 30-year, fixed-rate loans was plunging to 4.50%, the lowest in decades. Some 70% of CUs surveyed said they continue to use the services of the two secondary market giants. A majority of those that don't (60%) said they don't need the extra liquidity. Only a fourth of CUs surveyed are using another secondary market source. Only 15.4% of respondents have seen an increase in the re-default rates on modified loans over the past 12 months.
